Buying stock as a sole trader

[cyberdog]

Hi,
I want to take my hobby to the next level and start up a computer business as a sole trader (building, fixing, upgrading, etc), but I will still be doing my day job as well.
I will also be setting up a separate personal bank account for the business. The thing is I will need to hold a certain amount of stock. Will I be able to buy wholesale and if so how do I prove that I am running a business. I just don’t know where to start with regards to purchasing.
Thanks :?:

 

[Ozzy]

Just about anyone can buy wholesale, it just depends on the wholesalers policy of trade. Some will have minimum order values, some will require evidence of trading, and so on. There is also some rule regarding membership which I'm not 100% sure about, but is the reason why you have to "join" Matalans to buy so cheap.

Basically if you buy enough bulk from someone you get a bigger discount, so shop around.

 

[Whistle Ink]

As Ozzy says anyone can buy wholesale. I have managed to sign up to two very reputable and big wholsalers who sell computer parts etc. I managed to do this even before I have a business account. All they requested was a letterhead and some bank details. The application forms were really long though!

They may request proof of trading such as utility bill with the name and address of the business on but if you don't have these pick up the phone and explain to them you have just started your business.

Some have a minimum order and at the start you will have to pay when you order. Until you order regularly and in good size quantites they wont't give you credit terms.

 

[cyberdog]

Some have a minimum order.

Hi,
I have noticed this, some say £500 per month. I think I would find it very hard to reach that amount. As a sole trader would I be able to claim the vat back on any stock I purchase??

 

[Whistle Ink]

Hi,

Yes you would be able to claim VAT back. But thats only if you are VAT registered - something which you can do voluntarily and might be an idea if you are selling to businesses. If you are VT registered you will also have to charge VAT on the products you sell.

For more information you might want to take a look at businesslink.gov.uk and the hmce.gov.uk. There may be some other websites but I hink you can ask at your tax office also.

I am VAT registered (my accounant took care of all this for me) only because I sell products to businesses.

 

[gj]

Selling to VAT Registered businesses is the key to whether you should regsiter for VAT, and if you do register, then you can recover the VAT suffered on the parts etc.

If you sell mainly to individuals or non VAT regsitered businesses you may be better off not regsitering until your turnover exceeds the registration limit.

If you supply to a mixture, you need to take some advice from an accountant probably.


Graham